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Operating a business can present many challenges. One of these challenges is managing and protecting your intellectual property (IP). If a current or former employee seeks to steal your IP for their benefit, it can present some difficulties. There are, however, some steps you can take to protect your IP before someone attempts to steal it. This article will discuss these steps and outline what to do if you discover that an employee has stolen your IP.

Protecting Your IP

There are many forms of IP that a business may wish to protect. The first and most robust method of protecting your business’ IP is through registration. However, you can only register limited forms of IP through IP Australia, such as:

  • trade marks;
  • plant breeders rights;
  • designs; and 
  • patents.

The first step to protect your business’ IP is to ensure the employment agreements you have in place are clear. Your employment agreements should include two specific clauses to inform your employees that you are already protecting your IP.

1. Intellectual Property Clause

This clause should outline that you automatically own any IP the employee creates during the course of their employment

2. Confidentiality Clause

This clause should outline that employees may have access to confidential information during their employment, and this information must not be disclosed to third parties. This clause should also confirm that employees will ensure confidential information is secure, and they must not publish or reproduce this confidential information unless they are specifically told to. 

This clause should also outline that the employee must return any confidential information they have access to when they leave the business. They also should delete any other confidential information they may have stored elsewhere. 

These two clauses, in conjunction, seek to ensure that any IP created by your employees is actually owned by you, and the employee is not able to claim ownership of this IP. It also ensures that confidential information is not disclosed, either during employment or after the employee has left the business.

Protecting Your IP During Termination

If you terminate an employee, or they resign, you may seek to issue the employee with a letter of termination. This letter can outline, among other things:

  • the employee’s ongoing obligations of confidentiality and restraints from using your IP; and
  • their need to return any protected information.

This letter reminds employees of their obligations under the employment agreement. It should remind them that some of their obligations will continue after they leave the business.

You may also wish to check in with your IT team regarding data protection and security. Some simple email monitoring or alerts when certain information is accessed may be basic steps to provide you with alerts if your employee accesses the information after exiting your business. 

What If My IP Is Stolen?

Discovering your IP has been stolen is distressing. However, there are clear steps you can take to ensure the damage is minimised.

Current Employee

If a current employee has breached the terms of their employment agreement by disclosing confidential information to a competitor, you may wish to take disciplinary action. Depending on the nature of the breach, this may be: 

  • a warning letter; or 
  • for more serious breaches, the termination of employment.

Former Employee

If a former employee has taken your IP or provided confidential information to a third party, your options are slightly different. Your first step should be to send the former employee a letter reminding them of their obligations. Here, you should request them to return any confidential information or cease using your IP. This is often the only step you will need to take, as it alerts the employee to their ongoing obligations and that you are aware of potential breaches. If the breaches continue, however, a letter from a lawyer is often a sufficient deterrent.

If the breach is much more serious and your business has experienced significant loss, it may be necessary to seek a court order to ensure that the former employee immediately ceases using the confidential information or IP. 

You may then seek to pursue the employee for compensation for any losses you have incurred as a result of their breach. While this seems like a practical solution, any court proceedings involve high costs that you may not be able to recover from the employee.

Key Takeaways

If you wish to protect your IP from employee misuse, there are a number of steps you can take. It is crucial to outline what your IP rights are in any employment agreements you have. If a former or current employee has breached your IP rights, you must take urgent action to notify them of this breach. You should also outline any steps they need to take to rectify their actions. If you have any questions about asserting your IP rights against employees, contact LegalVision’s employment lawyers on 1300 544 755 or fill out the form on this page.


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